Total English Learning v Kids Counsel: Franchise Agreement Assignment & Restraint of Trade
Total English Learning Global Pte Ltd and Total English Learning International Pte Ltd (Plaintiffs) sued Kids Counsel Pte Ltd and others (Defendants) over a dispute arising from franchise agreements purportedly assigned to the Plaintiffs. The High Court dismissed the Plaintiffs' claims and the Defendants' counterclaims in both Suit No 420 of 2013 and Suit No 822 of 2013, finding the assignment of the franchise agreements to be invalid. The court also set aside an injunction previously granted. The claims included breach of contract, inducing breach of contract, and conspiracy. The counterclaims included breach of a non-disclosure agreement, fraudulent misrepresentation, tort of harassment, and a restitutionary claim. The court ordered each party to bear its own costs. The Plaintiff, Total English Learning Global Pte Ltd, has since filed an appeal against part of the decision.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiffs’ claims and defendants’ counterclaims dismissed in both suits. Injunction set aside.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case regarding the validity of franchise agreement assignments and the enforceability of non-compete clauses. Claims and counterclaims dismissed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Total English Learning Global Pte Ltd | Plaintiff | Corporation | Claims Dismissed | Lost | Mark Goh, Cheryl Ng, Pearl Lim |
| Total English Learning International Pte Ltd | Plaintiff | Corporation | Claims Dismissed | Lost | Mark Goh, Cheryl Ng, Pearl Lim |
| Kids Counsel Pte Ltd | Defendant | Corporation | Counterclaims Dismissed | Lost | Daniel Koh, Wong Siew Hong, Favian Kang |
| My English Pte Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | Daniel Koh, Wong Siew Hong, Favian Kang |
| Wise Education Centre Pte Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | Daniel Koh, Wong Siew Hong, Favian Kang |
| Rolmar Pte Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | Daniel Koh, Wong Siew Hong, Favian Kang |
| Wise English Pte Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | Daniel Koh, Wong Siew Hong, Favian Kang |
| Wise Learners Private Limited | Defendant | Corporation | Counterclaim Dismissed | Lost | Daniel Koh, Wong Siew Hong, Favian Kang |
| Literacy Development Pte Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | Daniel Koh, Wong Siew Hong, Favian Kang |
| My Literacy Place Pte Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | Daniel Koh, Wong Siew Hong, Favian Kang |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tay Yong Kwang | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Mark Goh | MG Chambers LLC |
| Cheryl Ng | MG Chambers LLC |
| Pearl Lim | MG Chambers LLC |
| Daniel Koh | Eldan Law LLP |
| Wong Siew Hong | Eldan Law LLP |
| Favian Kang | Eldan Law LLP |
| Faizal Shah | Mirandah Law LLP |
4. Facts
- Total Literacy (Singapore) Pte Ltd (TLS) was the original franchisor of the 'I Can Read' system.
- TLS entered into franchise agreements with franchisees, including D2–D8, to operate education centers in Singapore.
- Annabel Seargeant and Antony Earnshaw developed the ICR system and controlled both Total Literacy Pty Ltd (TLA) and TLS.
- TLS purportedly assigned the franchise agreements to Total English Learning Global Pte Ltd (TELG).
- D2–D8 terminated their franchise agreements and transitioned to the My English School (MES) system.
- D1 was incorporated and Kaske Gerold Ulrich, the owner of D2-D6, was the controlling mind behind D1.
- D8 claimed its franchise agreement was varied to one in perpetuity by Allston Boyer Parkinson (Allty) of TLS.
5. Formal Citations
- Total English Learning Global Pte Ltd and another v Kids Counsel Pte Ltd and another suit, Suit No 420 and 822 of 2013, [2014] SGHC 258
6. Timeline
| Date | Event |
|---|---|
| Kaske Gerold Ulrich became involved in the education industry. | |
| Chih Chien Lih Jennifer and her former husband acquired D7. | |
| Three deeds of assignment were executed. | |
| Email sent by Annabel to franchisees informing them of change in ownership. | |
| Letter sent by TLS to franchisees informing them of the sale of the business to the Plaintiffs. | |
| Plaintiffs claimed D8’s franchise agreement expired. | |
| Letter of demand issued by the Plaintiffs against D8. | |
| Non-disclosure agreement signed by Plaintiffs and D8. | |
| D1 was incorporated. | |
| Kaske was appointed as a director of Monkwell. | |
| David’s shareholding in D1 was transferred to Monkwell. | |
| Monkwell changed its name to MEIL. | |
| Increase in the number of shares in D1. | |
| Kaske transferred his shares in MEIL to Loh. | |
| Kaske ceased to be a director of MEIL and Loh was appointed. | |
| Second letter of demand was sent to D8. | |
| Suit No 420 of 2013 was commenced. | |
| D2–D7 terminated their respective franchise agreements. | |
| Letters were sent to the parents of the students, informing them about the impending switch to the MES system. | |
| The centres started offering the MES programme. | |
| The Plaintiffs commenced S 822/2013 against the Defendants. | |
| Trial concluded in late August 2014. | |
| Judgment delivered. | |
| Decision Date |
7. Legal Issues
- Validity of Assignment
- Outcome: The court held that the purported assignment of the franchise agreements from TLS to TELG was invalid.
- Category: Substantive
- Sub-Issues:
- Assignability of contract benefits and burdens
- Validity of notice of assignment
- Effect of no-assignment clause
- Breach of Contract
- Outcome: The court found that D6 and D7 breached the non-compete clause and D2-D8 breached the non-solicitation clause in relation to customers. D2-D4 breached the confidentiality clause.
- Category: Substantive
- Sub-Issues:
- Breach of non-compete clause
- Breach of non-solicitation clause
- Breach of confidentiality clause
- Restraint of Trade
- Outcome: The court found the non-compete clause in D6 and D7’s franchise agreements to be reasonable in the interests of the parties.
- Category: Substantive
- Sub-Issues:
- Reasonableness of non-compete clause
- Reasonableness of non-solicitation clause
- Legitimate proprietary interest
- Tort of Conspiracy by Unlawful Means
- Outcome: The court found D1-D6 liable for the tort of conspiracy by unlawful means.
- Category: Substantive
- Sub-Issues:
- Combination of two or more persons
- Intention to cause damage or injury
- Unlawful acts
- Loss suffered as a result of the conspiracy
- Tort of Inducing Breach of Contract
- Outcome: The court found D1 liable for the tort of inducing breach of contract.
- Category: Substantive
- Sub-Issues:
- Knowledge of the contract
- Intention to interfere with the performance of the contract
- Oral Variation of Contract
- Outcome: The court accepted that there was an oral variation of the contract as stated by Lum.
- Category: Substantive
- Sub-Issues:
- Evidence of oral agreement
- Authority to vary contract
- Effect of entire agreement clause
- Breach of Non-Disclosure Agreement
- Outcome: The court rejected D8’s arguments and dismissed the counterclaim in relation to the breach of cl 7 of the NDA.
- Category: Substantive
- Sub-Issues:
- Interpretation of good faith clause
- Moratorium on legal proceedings
- Fraudulent Misrepresentation
- Outcome: D8’s claim for fraudulent misrepresentation was rejected.
- Category: Substantive
- Sub-Issues:
- Representation of fact
- Intention to induce reliance
- Knowledge of falsity
- Tort of Harassment
- Outcome: D1’s counterclaim in the tort of harassment against the Plaintiffs could not succeed.
- Category: Substantive
- Sub-Issues:
- Existence of tort of harassment
- Repetitive nature of conduct
- Emotional distress or annoyance
- Restitution
- Outcome: D2–D8’s counterclaim for the value of the returned ICR materials therefore failed.
- Category: Substantive
- Sub-Issues:
- Unjust enrichment
- Free acceptance
- Contractual arrangement
8. Remedies Sought
- Monetary Damages
- Injunctive Relief
9. Cause of Actions
- Breach of Contract
- Tort of Inducing Breach of Contract
- Tort of Conspiracy by Unlawful Means
- Breach of Non-Disclosure Agreement
- Fraudulent Misrepresentation
- Tort of Harassment
- Restitution
10. Practice Areas
- Commercial Litigation
- Franchise Disputes
11. Industries
- Education
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Fairview Developments Pte Ltd v Ong & Ong Pte Ltd and another appeal | Court of Appeal | Yes | [2014] 2 SLR 318 | Singapore | Cited for the general principles relating to novations and assignments. |
| Benjamin Scarf v Alfred George Jardine | House of Lords | No | (1882) 7 App Cas 345 | United Kingdom | Cited to define novation. |
| Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd and others | House of Lords | Yes | [1994] 1 AC 85 | United Kingdom | Cited for the principle that the burden of a contract cannot be assigned without consent. |
| Salim Anthony v Sumitomo Corp Capital Asia Pte Ltd and others and another application | High Court | Yes | [2004] 3 SLR(R) 331 | Singapore | Cited for the requirements of a statutory assignment under s 4(8) of the Civil Law Act. |
| Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International), Singapore Branch v Motorola Electronics Pte Ltd | High Court | Yes | [2010] 3 SLR 48 | Singapore | Cited for the principle that adequate notice depends on the context of each case. |
| Lanxess Pte Ltd v APP Chemicals International (Mau) Ltd | High Court | Yes | [2009] 2 SLR(R) 769 | Singapore | Cited for the principle that the fact of assignment may be implicitly recorded. |
| Jubilee Electronics Pte Ltd and others v Tai Wah Garments and Knitting Factory Pte Ltd | Court of Appeal | No | [1996] 1 SLR(R) 352 | Singapore | Cited for the argument that an assignment in breach of a 'no-assignment' clause did not render the assignment void. |
| Williams v Earle | Queen's Bench | No | (1868) LR 3 QB 739 | England and Wales | Cited regarding the assignment of leases. |
| Old Grovebury Manor Farm Ltd v Seymour (W) Plant Sales & Hire Ltd (No 2) | Court of Appeal | No | [1979] 1 WLR 1397 | England and Wales | Cited regarding the assignment of leases. |
| CLAAS Medical Centre Pte Ltd v Ng Boon Ching | Court of Appeal | Yes | [2010] 2 SLR 386 | Singapore | Cited for the general principles applicable to covenants in restraint of trade. |
| Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan David | Court of Appeal | Yes | [2008] 1 SLR(R) 663 | Singapore | Cited for the principle that courts adopt a stricter approach to restraint of trade covenants in employment contracts. |
| Walton International Group (Singapore) Pte Ltd and others v Yau Kwok Seng Winston and another | High Court | Yes | [2011] SGHC 144 | Singapore | Cited for the definition of 'solicitation'. |
| Hellmann Insurance Brokers v Peterson | New South Wales Supreme Court | Yes | [2003] NSWSC 242 | Australia | Cited for the definition of 'solicitation'. |
| Tan Wee Fong and others v Denieru Tatsu F&B Holdings (S) Pte Ltd | High Court | Yes | [2010] 2 SLR 298 | Singapore | Cited for the definition of 'solicitation'. |
| PH Hydraulics & Engineering Pte Ltd v Intrepid Offshore Construction Pte Ltd and another | High Court | Yes | [2012] 4 SLR 36 | Singapore | Cited for the principle that the essence of confidential information is that it is not freely available in the public domain. |
| Trident Pharm Pte Ltd v Yong Pei Pei Tracey and another | High Court | Yes | [2014] SGHC 59 | Singapore | Cited for the principle that prices are not confidential if known to customers. |
| EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another | Court of Appeal | Yes | [2014] 1 SLR 860 | Singapore | Cited for the elements required to succeed in a claim for conspiracy by unlawful means. |
| OBG Ltd and another v Allan and others | House of Lords | Yes | [2008] 1 AC 1 | United Kingdom | Cited for the concept of intention in the tort of unlawful means. |
| Tribune Investment Trust Inc v Soosan Trading Co Ltd | Court of Appeal | Yes | [2000] 2 SLR(R) 407 | Singapore | Cited for the elements required to establish a claim in the tort for inducement of breach of contract. |
| Nagase Singapore Pte Ltd v Ching Kai Huat and others | High Court | Yes | [2008] 1 SLR(R) 80 | Singapore | Cited for the principle that a company can be a co-conspirator with its director. |
| Tee Yok Kiat v Pang Min Seng | Court of Appeal | No | [2013] SGCA 9 | Singapore | Cited for the existence of the tort of harassment. |
| AXA Insurance Singapore Pte Ltd v Chandran s/o Natesan | High Court | No | [2013] 4 SLR 545 | Singapore | Cited for the principle that there is no basis or principle upon which the tort of harassment is founded. |
| Walford v Miles | House of Lords | No | [1992] 2 AC 128 | United Kingdom | Cited for the concept of a duty to carry on negotiations in good faith. |
| HSBC Institutional Trust Services (Singapore) Ltd (trustee of Starhill Global Real Estate Investment Trust) v Toshin Development Singapore Pte Ltd | Court of Appeal | Yes | [2012] 4 SLR 738 | Singapore | Cited for the content of an express agreement between contracting parties to negotiate in good faith. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Civil Law Act (Cap 43, 1999 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Franchise Agreement
- Assignment
- Novation
- Restraint of Trade
- Non-Compete Clause
- Non-Solicitation Clause
- Confidential Information
- ICR System
- MES System
- Entire Agreement Clause
- Good Faith
- Unlawful Means
- Inducement of Breach
- Harassment
- Restitution
15.2 Keywords
- Franchise
- Assignment
- Restraint of Trade
- Non-Compete
- Singapore
- Contract
- Tort
16. Subjects
- Contract Law
- Franchise Law
- Tort Law
- Civil Procedure
17. Areas of Law
- Contract Law
- Franchise Law
- Restraint of Trade
- Tort Law
- Civil Procedure